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Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
 Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited direct near-term credit impact for energy-sector issuers rated by Fitch Ratings, according to the agency. However, the caps highlight that energy companies face mounting political risks that could influence investor perceptions of the sector and capex plans over the long term.
The caps have been proposed for 12 months, but even if they are extended, the direct impact should generally be limited if prices for coal and gas fall over the coming years, in line with Fitch’s base-case assumptions.
The near-term impact on Australian thermal coal miners’ financial profiles will be further mitigated, as typically around 80% of the thermal coal produced in the country is exported, and therefore is not subject to the cap.
The natural gas sector will be more exposed, as domestic demand accounts for a larger share of supply. Santos (BBB/Stable) and Woodside Energy Group (BBB+/Stable) are large suppliers of gas to the domestic market. Such sales account for more than 40% of Santos’s gas production, but we estimate that only around 15% of total production goes to the east coast markets that are exposed to the price cap.
Woodside’s domestic gas sales, including pipeline gas from the NWS Project, Pluto and Wheatstone, account for less than 6% of its gas production, with the rest exported as LNG. For both companies, most gas is already produced under long-term contracts, which will be unaffected by the caps, limiting the near-term impact. The proportion of output affected could nonetheless rise over time if the caps are extended beyond 12 months.
The prevalence of long-term supply contracts will also reduce the impact of the caps for most domestic electricity and gas retailers, including Origin Energy (BBB/Stable). If global energy prices remain high, it is possible that the caps could offer a competitive advantage to some retailers that rely more on short-term supply contracts. That said, the superior sourcing ability and flexibility in contracts should limit downside risks for large retailers. For electricity sales, the highest-cost power generator generally determines the wholesale energy market price, and we anticipate a neutral to marginally positive financial effect for entities like Origin that have flexibility in their generation portfolio.
The price caps will add to a perception that Australia’s mining sector faces mounting political risk, even though we do not believe they will have a major impact on Fitch-rated issuers in the near term. For example, the government has announced plans to implement a new system to protect sites important to Australia’s indigenous peoples. Firms in the sector, as in other parts of the world, also face political risks associated with official efforts to promote the transition to renewable energy sources.
Mounting political risk may influence investors’ perceptions of the sector, and therefore the terms on which companies are able to access finance. This could also have ramifications for M&A plans or long-term capex strategies. Nonetheless, it is likely to take time to assess the impact, which may also be offset by other market developments.
Australia’s parliament on 16 December passed legislation empowering the government to regulate gas prices, alongside an AUD1.5 billion relief package for firms and households. It remains unclear how the relief package will affect power and gas market dynamics, but we expect its impact to be temporary. The authorities plan to cap domestic gas prices at AUD12 per gigajoule. Domestic thermal coal sales prices in New South Wales and Queensland will also be capped at AUD125 per tonne.
Source: Fitch Ratings
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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
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